(1 of )Julie Mercer-Ingram, wife of Matthew Ingram who is the Director of Marketing and Partnerships for Yuba Bicycles, talks with operation manager Marc Azevedo about a Boda Boda All-Terrain bicycle, while joined by Oceanne Sarrazin, 8, daughter of Yuba Bicycles founder Ben Sarrazin, in the parking lot at Yuba Bicycles on Thursday, May 19, 2016 south of Petaluma, California . (BETH SCHLANKER/ The Press Democrat)

(2 of )Julie Mercer-Ingram, wife of Matthew Ingram who is the Director of Marketing and Partnerships for Yuba Bicycles, rides a Boda Boda All-Terrain bicycle with her two sons Elias Ingram, 5, and Arlo, 2, in the parking lot at Yuba Bicycles on Thursday, May 19, 2016 south of Petaluma, California . (BETH SCHLANKER/ The Press Democrat)

(3 of )Elias Ingram, 5, son of Matthew Ingram who is the Director of Marketing and Partnerships for Yuba Bicycles, rides a Flip Flop balance bike in the parking lot at Yuba Bicycles on Thursday, May 19, 2016 south of Petaluma, California . (BETH SCHLANKER/ The Press Democrat)

Petaluma leads Sonoma County in economic development

BILL SWINDELL

THE PRESS DEMOCRAT | May 22, 2016

As his lease expired and Aseem Das was forced to move World Centric, the company he founded, from its Palo Alto location in 2013, he considered where to go.

“You could go to the East Bay, where you would get office space but not a very good quality of life,” said Das, whose business makes compostable plates, cups and utensils. “It’s just kind of strip malls and tract houses.”

A few employees lived in Sonoma County, and they encouraged Das to explore the option even though he didn’t know anything about the area. He liked what he found in Petaluma, especially because it offered affordable commercial office space compared to other places around the Bay Area and had enough industrial acreage to be able to set up manufacturing in the future. But that wasn’t what sealed the deal.

“It was a great quality of life,” he said. “And there are lots of like-minded businesses in Sonoma County which are organic, food-related — and a great sense of community. And all those things would be a good fit for World Centric and its mission and values.”

His decision was one example of many in recent years that have made Petaluma the leader in economic development in Sonoma County. It has one of the lowest unemployment rates in the county — 4.1 percent in March — and the second highest median household income, at $75,655 in 2015.

The business activity has rapidly reversed the fortunes of this city of almost 60,000, which was hit with a one-two punch at the turn of the millennium — fallout from the telecom bust of the early 2000s and the real estate crash some six years later. At its low point, commercial office vacancy rates were 40 percent.

Petaluma has now turned a corner. The office vacancy rate is down to 13 percent. Its sales tax receipts increased 8 percent to $12.4 million in fiscal 2015.

It has a revitalized downtown, soon to have a beer garden and food trucks, that is attracting businesses and workers in a wide range of fields including but going beyond the agriculture and food production industry that historically has driven the local economy. The top private employers include such companies as Lagunitas Brewing, Petaluma Poultry Processors and Clover Stornetta Farms.

The clusters of new and growing firms range from mortgage lending to bicycle designers, high-tech businesses to financial services firms. They have joined a diverse community that also includes the women’s yoga clothing producer Athleta Inc., outdoor equipment maker CamelBak Products and Ciena’s Blue Planet division, a telecom software provider.

“I think Petaluma is becoming a magnet for talent,” said Ingrid Alverde, economic development manager for the city.

Recent activity

A list of recent tenant activity by developer Basin Street Properties offers a vivid snapshot of the diversifying business climate. In 2015, digital ticket firm Vendini Inc. and financial tech provider FIS Mobile both arrived from San Francisco to open new satellite offices. First California Mortgage expanded its operations. East Bay restaurant Sauced BBQ & Spirits opened a popular location downtown and two longtime food stalwarts, Amy’s Kitchen and Clover Stornetta, both expanded.

This year, a mortgage lender, Premier Lending, opened a new office at Theatre Square, Summit Funding expanded into larger offices at Petaluma Marina Business Center, Headlands Asset Management moved north from San Rafael into a larger space and Golden State Wealth Management opened a new branch.

A major driving factor? “It really does come down to location, location, location,” said Ben Stone, executive director of the Sonoma County Economic Development Board.

Petaluma is able to take advantage of its location less than 35 miles from San Francisco. Local traffic congestion and housing costs are less. Executives and personnel can readily get to the city as well as major airports and highways.

For example, Revive Kombucha has seen benefits in its move from Windsor to Petaluma late last year, especially as it has now expanded into 20 states. Sean Lovett, owner and CEO of the beverage company, said that freight providers did not want to come pick up products in Windsor and would charge extra to do so.

“It was strategically close to the highway. It saved us money and hassle,” Lovett said of the move to Petaluma.

The other benefit is that its commercial rents are much cheaper, especially compared to Marin County. For instance, top-end office space in Petaluma is going for $2.01 per square foot compared to $4.32 in Mill Valley, according to Cushman and Wakefield, a real estate brokerage firm.

There also is a variety of acreage available, such as a healthy offering of industrial space. That was an attraction for Labcon to move from San Rafael to Petaluma in 1994, especially as it wanted to use solar electric panels to aid in its manufacturing of pipette tips, the pointed, slender devices used in medical research and lab facilities.

“We couldn’t do that without owning our building and Petaluma was a great canvas for doing that,” said Jim Happ, president.

Labcon also serves as an example of the type of business that Petaluma is trying to showcase as it attracts companies across different sectors, specifically those with a focus on sustainability.

Some local companies have led the charge. Lagunitas uses a new wastewater treatment system that saves water and also breaks down pollutants into methane gas, which can be used to generate heat and power. And publicly traded Enphase Energy. has been at the forefront of the solar energy field with a system that increases the efficiency of panels.

Petaluma values

Alverde said the city has worked with some businesses to help develop sustainability plans, as the practices have become popular from the boardroom to the consumer shelf. That effort also aids Petaluma in developing a cachet that is helpful in luring other businesses concerned about their environmental footprint.

“They’re companies that have those values, and they’re a good fit for Petaluma . . . because in Petaluma, you can live those values,” she said.

Labcon is doing that. It bought a nearby building so it could house a separate sterilization facility. That plant allows Labcon to sterilize its products instead of shipping them to San Francisco or Los Angeles, saving the company $100,000 a year. The facility is not for exclusive use by Labcon, which generates $35 million in revenue annually.

“There are companies we do business with and I would love to see them relocate to Petaluma. The sterilizer is already here for them,” Happ said.

An idea with wheels

The city also is trying to develop a reputation as an innovation region, a difficult task given it’s competing against the likes of Silicon Valley and San Francisco’s tech sector. Still, innovators have emerged such as Yuba Bikes, where the Petaluma facility designs and supports the overseas production of cargo bikes. The bicycles can be used for ferrying everything from groceries to children and are becoming a replacement for cars in some urban areas. Yuba also makes an electric powered bike that has become popular among commuters.

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The company moved from Sausalito because it ran out of space and its owner, Benjamin Sarrazin, wanted a location near water, said Marc Azevado, operations director for the seven-employee firm. The activities of the Petaluma River proved a prefect lure.

Petaluma scored a major coup last year when banking app maker FIS Mobile set up its new downtown office with 40 employees, providing attractive tech jobs that are the envy of any city economic development official.

The company had a number of employees who were commuting to its offices in Larkspur and San Francisco from their Sonoma County homes. It also had developed a relationship with Sonoma State University’s engineering science department over the past five years, including participating in its classroom activities and selecting its students for intern jobs, said David Favela, head of operations and analytics at FIS Mobile.

“For us, it’s about quality of life. We are saving people about two hours a day on a commute,” Favela said.

It also could offer a more complete year-round program for Sonoma State interns, many of whom are later hired.

“We coined it (Sonoma State) ‘the farm’ because it’s a minor league system,” he said. “We have been finding some of these students are electing to stay here and not go down to San Francisco.”

The office’s proximity to the pending Sonoma-Marin Area Rail Transit train station also added to Petaluma’s appeal, he said.

The quality of life in Petaluma is the other major factor that is attracting workers to the area, creating a talent pool that makes it easy for companies to locate, recruit and expand, especially those in growing sectors as tech, design and science.

City’s attractions

Many fall in love with the town, with its easy access to hiking and cycling trails, river sports and a burgeoning restaurant scene, not to mention world class beers. The downtown development has added to its allure.

“We have more family housing and more affordable housing” compared to Marin County and San Francisco, Stone said.

To date this year, the median home price for west Petaluma is $735,000 and for east Petaluma is $601,000.

While prospective employees once had a difficult time landing a job in town, that’s starting to change. Take Annie Davis, who moved to Petaluma almost three years ago with her husband, Scott, after visiting while planning their wedding in Occidental. They had been living in Oakland and Davis, who has a master’s degree in business administration from Harvard Business School, had been working at a startup tech company.

“We certainly came here for the lifestyle. It was a very conscious transition,” Davis said. “We both took pay cuts to move here. It was very deliberate. There aren’t tons of job opportunities.”

After months of searching, Davis landed a job at World Centric as director of marketing. She had a child almost a year ago and was able to come back part-time as director of partnerships. Her husband took a job at a real estate finance firm in Windsor.

She recently had a friend from Harvard come up to Petaluma and is looking for a job there.

“I see more and more people with the intention,” Davis said.

You can reach Staff Writer Bill Swindell at 521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.